Bernanke: System unstable if debt limit not lifted

RonaldD. Orol

WASHINGTON (MarketWatch) - Federal Reserve Chairman Ben Bernanke said Thursday that if Congress doesn't agree to increase a fast approaching $14.3 trillion borrowing limit it would result in an increase in interest rates, a worsening deficit and a destabilized financial system. "The costs would be an increase in interest rates which would worsen our deficit and hurt all borrowers in the economy," Bernanke said at a Senate Banking Committee hearing on the financial system. "The worst outcome would be that the financial system would again destabilize, which would have extremely dire consequences for the economy."

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